...Unit 3 Individual Project Dana J. Walker Strategic Management October 13, 2013 American Intercontinental University Abstract The following paper will be a comparison of the advantages and disadvantages of the first mover theory and the last mover theory. It will show examples of real firms that have been either successful or a failure as they have employed one of the theories at their company. In my conclusion I will give my recommendation on which theory I think should be used and I will support that with not only details but also an example of a company that I feel validates my claim. The first mover theory can be summed up as “being the first in a new market allowing for an advantage over ones potential rivals” (First-Mover Advantage,” 2013). Doing this will allow for both advantages and also disadvantages to the business that adopts this mind set and then proceeds on that course of action. First Mover Advantages: * Ability to capture market share majority – This is important because “the market’s perception of the product or service is driven by your market share and that determines you prerequisite for growth” (“Why is Large Market Share,” 2008). * Ability to become the low cost leader – Doing this means the firm can minimize your cost to pass the savings on to the customers. This builds customer loyalty to you brand or service. * Create and protect intellectual property – The creation and protection of intellectual property allows the firm to...
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...First – Mover Advantage: the Longevity of Pioneers Main questions to be addressed in the paper: 1. What are “first – mover advantages”? 2. What first – mover advantages make those who still dominate the market last long? 3. How do first movers who still dominate the market conquer first – mover disadvantages and challenges posed by second movers and late movers? 4. How do first movers dominating the market protect their longevity from in – house obstructions and uncontrollable<outside> obstacles? 5. How do they compete with second movers and late movers? 6. What are competitive advantages of first movers who dominate the market? 7. What’s the trend of the first movers towards dominating the market? Why are we interested in this issue? We just see that many pioneers were routed by second movers or late comers. There are not so many first movers who has been dominating the market since they pioneered. There are a number of causes that can drive first movers out of the market or overthrown by late movers. The survivors are interesting. We’d like to know how they do it and remain strong. We’d like to learn the strategies they. We also want to analyze the competition and the trend of the first movers. What to be included in the paper 1. General information about first movers: what are they? What do they do? Why are they called first movers? 2. First mover advantages 3. There are 3 types of first – movers: ones who still dominate the market, ones who were...
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...First and Second Mover Advantage First Mover Advantage Definition First movers are the companies that take an initial competitive action, either strategic or tactical. First movers are companies that have the resources, capabilities, and core competencies that enable them to gain a competitive advantage through innovative and entrepreneurial competitive actions. By being first, the first mover hopes to gain a sustainable competitive advantage, earn above-average returns until competitors respond effectively and gain customer loyalty, thus creating a barrier to entry by competitors. Any advantage gained generally will vary based on the type of competitive action and type of industry as also to the extent to which the action is difficult to imitate because of the difficulty of imitation, first mover actions based on core competencies should be sustainable for longer periods than actions based on other factors. There also are dangers or disadvantages of being a first mover. There are three major ones: • There are risks related to being first because of the inability to predict success of the action. • Second movers through reverse engineering or imitation can avoid high development costs. • Extent and range of marketplace competition yields greater potential risk. In some instances, companies that delay their response to a competitive action fail to compete effectively and their performance suffers. However, that may not always be true since it may be more appropriate...
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...“First-mover advantages” is defined as the benefits that accrue to firms that enter the market first and that later entrants do not enjoy. The opposite of first-mover advantages is called “late-mover advantages.” (Peng, 2011) First movers enjoy many benefits. For example, they gain advantage through proprietary technology. First movers may also make preemptive investments. Japanese MNE’s picked South-East Asian distributors and suppliers as new members of Keiretsu, but blocked all the late movers. It is also possible for the first movers to erect significant entry barriers for late entrants, such as high switching costs due to brand loyalty. Another great advantage of a first mover is that, they can avoid clash with dominant firms at home. Intense domestic competition may drive some non-dominant firms abroad to avoid clashing with dominant firms head-on in their home market. For example, Toyota was dominant in Japan. But Honda took the opportunity and entered American market ahead of Toyota. Finally, first movers may build precious relationships with key stakeholders such as customers and governments. Motorola entered in China in 1980 and has benefited from its lengthy presence in China. China adopted Motorola’s technology as its national paging standard, which resulted in blocking of other firms. Late movers also enjoy many benefits. First of all, late movers many be able to free ride on the huge pioneering investments of first movers. Second, first movers face greater...
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...influential political assassinations. For the decade though, and despite a mild recession between 1960 and 1961, the average still managed a respectable 30% gain from the 616 level to 800. The 1970s marked a time of economic uncertainty and troubled relations between the U.S. and certain Middle-Eastern countries. To begin with, the decade started off with the ongoing Recession of 1969–70. Following that, the 1970s Energy Crisisensued which included the 1973–75 recession, the 1973 Oil Crisis as well as the 1979 energy crisis beginning as a prelude to a disastrous economic climate injected with stagflation; the combination between high unemployment and high inflation. However, on November 14, 1972, the average closed above the 1,000 mark (1,003.16) for the first time, during a brief relief rally in the midst of a...
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...of an entrepreneurial strategy are: 1. The generation of a new entry opportunity, the result of knowledge, and other resources into a bundle that will be valuable, rare, and difficult for others to imitate. 2. The exploitation of a new entry opportunity. 3. A feedback loop. E. If the new entry warrants exploitation, then firm performance depends on: 1. The entry strategy; the risk reduction strategy. 2. The way the firm is organized. 3. The competence of the entrepreneur and the management team. F. Long-run performance is dependent upon the ability to generate and exploit numerous new entries. II. GENERATION OF A NEW ENTRY OPPORTUNITY A. Resources as a Source of Competitive Advantage 1. Resources are the basic building blocks to a firm’s functioning and performance. These can be combined in different ways to achieve superior performance. 2. These resources need to be considered as a bundle rather than just the resources that make up the bundle. 3. A bundle of resources is: a. Valuable when it enables the firm to pursue opportunities, neutralize threats, and to offer products and services that are valued by customers. b. Rare when few or no competitors have it. c. Inimitable when replication of this combination of resources would be difficult and/or costly for competitors. 4....
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...THE FIRST MOVER Kelly Holm American InterContinental University Professor Bennett MGT 680 -1303D-01 Abstract The first mover theory implies that the first organization to enter the market has the upper hand in that market. There are advantages and also disadvantages to any theory. We will discuss in this paper some advantages as well as disadvantages of this theory. The First Mover Theory The First Mover Theory implies that the first company to enter a new market gains them superior brand recognition as well as customer loyalty. This is a form of competitive advantage for organizations to gain. There are however, pros and cons to being the first mover and the late mover. Late Mover Advantages Entering the market as a late mover gives the organization the opportunity to step into a market that has already been tested. It has been established and researched by the first mover. Consumers are familiar with the product and the marketing and developing has also been tested to determine the demand and response in the market. The uncertainty is removed from the market by the first mover. There is low risk for the later mover in predicting and how to adept to the market changes. For example, they have the ability to see what methods work without putting up risky investment capital and making bad business decisions. Essentially they have a lower risk in investment. Late movers have the opportunity to piggyback onto the first mover’s investment and improve on the product...
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...In a world where being first is usually equated with being the best, celebrated management guru and author Jim Collins’ article ‘BEST BEATS FIRST’ debunks the myth of First Mover Advantage. He outlines with examples, how it is that the apparent ‘Johnny come lately’ endures in a market that swallows its very first players. The article, written in August 2000, cites many examples to show that for FMA to be applicable, there are strict conditions, which rarely hold true in reality and in the author’s words “…being first seldom proves to be a sustainable advantage and usually proves to be a liability” The author starts by pointing out how the inertia of late movers or followers is not a sustainable advantage to those who are first to build market share. This is especially true is the followers are established industry giants who move into a new market much later with their “vast pre-existing customer sets”. This often spells end-game for the pioneers who, in their complacence, have fallen prey to a more detrimental kind of inertia- Incumbent Inertia. Mr. Collins cites the example of VisiCalc, now virtually forgotten as the first major PC spreadsheet, as the late entrant Excel still reigns supreme. The author moves on to the now widely referenced example of how the PalmPilot learnt from the technical and design loopholes of the much-publicized Apple’s Newton MessagePad. The PalmPilot entered the market with a product with the script Graffiti which had none of Newton’s glitches, thus...
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...strongly connected to concept of the first mover advantage. The company that leads the way into a new market as a first mover has definitely some important top-line benefits and competitive advantages that might ensure superior sales and profits on a long-term perspective. Furthermore, first movers tend to create a large and lasting impression on customers and develop strong brand recognition (Boulding & Christen, 2001). On the one side, services are generally characterized as being higher in experience and credence qualities than products, which increases the risk in their purchase. Therefore, customers rely more on word of mouth rather than advertising. While customers that purchase goods get something tangible in exchange of their money, service purchases do usually not result in ownership of something physical. Because of that intangibility, services do generally not attract customer’s attention that easily and the appreciation of the services is harder to evaluate for the customer than in the case of purchasing goods (Kotler & Keller, 2012). For that reason, I would argue that service companies have a lesser advantage of being the first mover in a market compared to manufacturing companies, since the customer appreciation of purchasing goods is easier than in the case of purchasing services. This makes services generally less recognizable and harder to evaluate for customers, even if the company providing the service was the first mover in the market. 2. Service companies...
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...About First Mover Advantage Innovation and uncertainty • Technological uncertainty • Uncertainty regarding the technological features of the product – Standards – Dominant design • Market/Demand uncertainty • Uncertainty regarding the size and growth rates of the markets for new products – Potential uses – Substitute products – Complementary products First Mover Advantage A first mover is a firm that takes an initial competitive action. Advantages of first movers If successful, the firm earns above-average returns until other competitors are able to respond effectively. Develop customer loyalty. Harley-Davidson has been able to maintain a competitive lead in large motorcycles due to intense customer loyalty. Disadvantages of first movers High risk High development costs High demand uncertainty First mover market entry • Advantages Above-average returns until other competitors respond effectively Start down the learning curve earlier Opportunity to gain customer loyalty Opportunity to set standards Disadvantages • Uncertainty about demand • High development costs • Risk of adopting a losing standard (Beta/VHS) • • • Forces Shaping Industry Competition Threat of new Entrants Bargaining power of Suppliers Rivalry among Existing Competitors Bargaining power of buyers Threat of substitute products Forces Defining Competition In Mini Steels Rivalry • Diversification in product lines, ex pipes • Move towards high quality bars, structural...
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...project. (1 point) A sustainability analysis is similar to a five forces analysis because they are focus on creating competitive advantage. The sustainability analysis is to analyze and find a way to compete with competitors and deal with potential entrants, in order to maintain profits in the long run. The analysis includes the company’s resources and isolating mechanism that help the company to sustain its advantages. The five forces analysis also analyze 5 factors, like supplier power, buyer power, competitors, new entrants, and substitutes and complements, which affect to the company profits. The company can use both analysis to build competitive advantage and maintain its position, market share, and profit margin in the industry. 2. (a) How do economies of scale affect sustainability? (b) Economies of scope? (2 points: 1 point each) When economic of scales happens it definitely affects sustainability because the resources and isolating mechanism changes. For some companies might be easier to scale to large quantities of production and the competitive advantage could change for the one able to do it. Economies of scope will also change the sustainability because producing two products because it is the same cost to produce one of them can change how companies limit competitors and one of those two products could become an advantage for some or the other way around 3. Kellogg’s and General Mills have their market dominance for over a century. Sprint and T-Mobile...
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...high demand by time deprived, dual income households. * The product line was varied and was perceived more tasty and healthy than competition. * Demand for refrigerated fresh pastas was growing faster than dry pastas. * The size of the package had the right portion of pasta and sauce making it convenient to cook. * TruEarth enjoyed the first mover advantage in market. * Cooking the pasta was quick and easy. Each package recommended the best sauce option. The consumer did not have to do any guess work. * The package came with instructions to customize the meal if desired, like add grilled chicken or shrimp. Pizza vs. Pasta: Opportunity- | Pizza | Pasta | Market size | $5.8 B | $4.4 B | Customer perspective | Indulgence | Meal | Source of extra revenue | Customer may purchase multiple toppings | Customer will purchase only one sauce for one packet of pasta | Competition | Local pizzerias, National and international chains, Kraft, Nestle | Rigazzi | First mover advantage | Rigazzi was developing a similar concept. So if TruEarth does not act quickly it may not have first mover advantage. | Yes | Price | $8.00 + $3.50 | $5.75 + $ 4.50 | All commodity Volume | 40% | 50% | Pizza vs. Pasta: Development process– Answer 2: Answer 3: Exhibit 6 shows the results survey conducted to find out the most significant attributes of pizza. The...
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...Entravision slowly but surely fell behind in the ever more digitalized broadcasting market. Having found a market niche in the Hispanic market segment, Entravision set out to create a new Data analytics department called Luminar to utilize and profit from information gathered about the Hispanic core customership. The first segment argues whether and how Luminar is able to create value by implementing Big Data analysis. Consequently, this paper tries to clarify whether the obtained advantage can indeed be of a sustainable nature and thus allow for an independent and successful department within the Entravision construct. Furthermore, the data gathering capabilities are being analyzed to inquire into whether there is viable competitive power to benefit from the advantages mentioned priorly. Finally, having established the background for the undertaking, the paper will shed a light on how exactly the department would fit into the organizational structure and what benefits and pitfalls the embedment or independent venturing of Luminar would have. 2. Value Creation In order to asses the added value of Luminar to the mother enterprise Entravision this paper will provide a first outlook of the Latino segment in the US and then conclude with the Big Data analytics aspect, which comprises additional organizational and strategic issues. Latinos are the largest and fastest-growing minority group in the United States. The Latino population is forecasted to expand to 85 million by 2030, which...
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...toothbrushes topeople who do not brush , medium range toothbrushes to the people currently using low level brushes andfinally for primary market in urban area battery operated toothbrushes should be promoted. Q2.Theoretically, how many marketing objectives Cottle can have. Make a comprehensive list of all thealternatives. List of possible marketing objectives of Cottle: Securing early market share in emerging markets. To achieve a toothbrush unit growth rate of 25-30% in 2010 in India. To educate consumers from semi urban and rural areas about oral hygiene so as to increase the oral care sector’s growth rate and in turn their own company’s market share by being the pioneers in that field. Q3.Has Cottle enjoyed the first mover advantage? How? The...
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...Group 5 - Carrefour China, building a greener store 1. As Monaco, how would you size up the situation? What are the major issues for Carrefour China? What are your key concerns about the green store project? Carrefour is the biggest foreign retailer in China and is in the middle of a rapid expansion phase and plan to open 100 new stores in 2006-2007. One of the reasons why Carrefour was successful in the earlier parts of their Chinese expansion was that they had experience from similar local culture in Taiwan, giving Carrefour the ability to transfer existing competitive capabilities from Taiwan to China in accordance to the theory of Global firms’ competitive advantages (Lasserre, 2012). Another factor that helped the entry to the Chinese market was that due to the foreign restrictions they partnered with local firms and building owners, thus avoiding these regulations. Carrefour employed local store managers to the run the stores, however the tenure of the store managers was usually between one or two years. The short tenure lead to myopia thinking regarding the stores constructions and operations. Underinvestments in areas which the store managers deemed to be of no importance but in reality were very important for a well-functioning store followed, such as under-sized air conditioning units and refrigerators. The short-term thinking was largely ignored by the senior management who focused solely on the current expansion. The major issue for Carrefour would later be...
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